by: Mary Hanawalt
Many small businesses subsist on a small but manageable profit margin. Most small businesses are run by do-it-yourselfers. When there is such a fine line between profit and loss, most owners will opt to rely on themselves rather than bring in professional resources. Unless they know for a fact that a computer system vendor or consultant is reasonably priced, ethical, and capable of remaining within the budget, they will opt to assign a low priority to what may appear on the surface to be a non-critical consideration. Oftentimes, they will backburner a project that doesn’t need attention right this minute just to keep the daily work flow on track. This can become an issue when there is a need for a capital expenditure that was not carefully planned for. It not only can dig significantly into the bottom line, it can disrupt the normal course of business.
Let’s take for example a make-believe business. I’ll call it “A+ Clown Store”. The A+ Clown Store is a retail store that has been in business for thirty years. They pride themselves on customer service, and have a loyal customer base because of their consistent ability to provide product rapidly. This trait has enabled them to continue to be competitive, even though they do not have a website. They market to existing and potential clients through mail campaigns.
They have one server and two workstations that are networked together that they purchased used fifteen years ago. The software is a DOS based point-of-sale and inventory control system. They have an aging impact printer that is used for multi-part invoices and packing slips. They have a fairly new laserjet printer used for letters and flyers. Everything works. However, the software vendor retired several years ago, so no software support. But that’s okay, right? Everything works. The owner knows enough to occasionally clear unused files from the hard drive, run defrag and diagnostic utilities, and backup.
The problem is that eventually hardware components fail. One grim day, the trusty old DOS based server powers down for the last time. Let me present to you two possible endings to this unlucky event.
Ending #1: The owner knew, deep in the back of his mind, that this might happen someday. However, his luck had held out so far, and he didn’t consciously consider that it might one day change. He did not have a plan in place, even though his old software vendor has warned him. His attempt to find an equivalent replacement server only met with laughter from the local computer shop. His inquiry as to whether his backed up software and data could be loaded and run on a Windows network also met with laughter, all the more when he disclosed that his backup was on 5.25 inch floppy disks. It ended up that he spent an immense amount of time, not to mention way too much money, on a new hardware platform, new software, and a computer technician to put it all together, train employees, and salvage data. Ouch! Big hit to the bottom line, and big hit to the customer base due to all the downtime.
Ending #2: Several years earlier, when the software vendor retired, he was kind enough to let the owner know that a system failure of aging equipment could have devastating effects on business. The owner wisely took this to heart. He and his employees began to review demonstrations and talk to other retail owners about available point-of-sale and inventory control software, and identified the most suitable replacement software for the future. He hired a recommended computer consultant to provide him with a plan. Since the owner had no desire to make any major changes while everything was going so smoothly, the consultant recommended a hardware backup device that could interface with the old hardware, as well as with current hardware technologies. It would be used for a data only backup, since the owner was aware that once there was any system failure, the old software would be unusable, but the ability to convert the data to a new software application would be critical. The plan also provided a method of implementing a new hardware network, loading new software, and converting existing data in a timely and efficient manner. Given a reasonable estimate, the owner increased his monthly feed to his capital expenditures account. He also devised a down-time plan describing how his business would operate manually in the transition period. So when that fateful day finally arrived, he was ready! Small hit to the bottom line, and no hit to the customer base.
The moral of this story is “if it ain’t broke, don’t fix it”. However, do maintain it, do upgrade as possible, do have an action plan, and do have funds stashed away. Do not get caught unprepared. I assure you that this will help keep your profit margin intact, and your customer base satisfied.
Copyright Mary Hanawalt 2007
Mary Hanawalt is a consultant with Creative Information Group, which provides a unique variety of information services for small businesses. She has a background in software development and systems analysis. Stop by http://creativeinfogroup.com to see what small business services are offered.